Question

Define balance of trade. Distinguish between favourable balance of trade and unfavourable balance of trade.

Answer 1

The difference between export and import is known as balance of trade.

Favourable balance of trade	Unfavourable balance of trade
1. If the value of exports is more than the value of imports, it is called favourable balance of trade.	1. If the value of imports is greater than  the value of exports it is known as unfavourable balance of trade.
2. Favourable balance of trade is regarded good for the economic development.	2. Unfavourable balance of trade is seen  harmful for the domestic economy.